why cannot we do this via 2 FF only?Make a transitions from 0,3,1,2 and make a function to add 1 to each value that will turn into 1,4,2,3 counting ffs.If we have 3 FFs problem is we need to ensure so that it does not go into some unused state and doesn't return back to our used states....

@rajoramanoj, from state sequence we get state 4 where we need 3 bits to represent,100, with 3 bits we have 8 combinations 0 to 7, those state are not in sequence are unused states, for those next state is shown as dont cares.